Where’s the Bounce?

Unit dose products promised to revolutionize the laundry detergent segment. But nearly a year into their launch, category growth remains elusive.

Tom Branna, Editorial Director01.21.13

No matter what you call them—single dose, unit pack, pak or pod—those convenient, drop-in-the-washer replacements for traditional liquid and powder laundry detergents promised to invigorate the category. But it’s been nearly a year since they debuted in the US and the laundry category continues to struggle. According to SymphonyIRI, Chicago, although unit dose detergents have grabbed a 6% share of the market in less than a year of availability, the overall US laundry detergent market has actually declined during the period.

Why? He explained that unit dose has two challenges to its overall success. One is value. Many consumers still feel as though they are in a recession and are watching their purchases which puts higher priced unit dose forms out of their reach. Two, many regular detergent users have their own “recipe for success,” and unit dose products don’t let them vary the detergent load to match the soil load.

Then, there’s an even bigger question marketers and their suppliers must grapple with:

“What is the impact of unit dose on consumption patterns in the US?,” asked Kuchinski. “Is unit dose driving the decline in the category?”

Tide Pods hold 70% of the unit dose laundry segment.

Laundry detergent sales slipped 0.19% to slightly more than $7.2 billion, for the 52 weeks ended Nov. 4, 2012, according to SymphonyIRI Group (see chart below). P&G dominates the US laundry care market, with Sun Products and Church & Dwight far behind. Taking a closer look at product form, Tide Pods also hold a 70% share of the unit dose market and are on pace to deliver nearly $500 million in sales in their first year of availability, according to P&G.

Follow the Leader

Through all the ups and downs, twists and turns, Procter & Gamble continues to lead the US laundry care market. In a recent meeting with investors, Alex Keith, VP-fabric care, North America and brand franchise leader, fabric enhancers, noted that P&G holds a 58% share of the North American laundry market—about four times higher than its closest competitor.

Despite that domination, P&G wants more. Company executives realized that the economic crisis led to changes in the consumer and macroeconomic landscape. Therefore, they developed key strategies to win in this new environment where consumers increasingly hold more power. They include:

Trade In. Make P&G fabric care brands more attractive to more consumers;

“At the same time, we are improving productivity across the business to fund growth and increase profitability,” said Keith. “One opportunity is that we are bringing users into the franchise by making sure that our pricing is right and creating marketing that demonstrates the superiority and value of our products. Our products are better performing and we need to tell people that.”

According to Keith, consumers need to understand that one cap of Tide removes more food stains than six caps of the leading liquid bargain brand. Or that Era has two times the stain fighting power as the leading liquid bargain brand.

“We know that we have the opportunity to trade in consumers who want to purchase products at a lower price than Tide.”

To reach these consumers, P&G rolled back prices on Gain detergent powder, introduced large size packs and began highlighting freshness claims at all consumer touch points.

The Fight for No. 2

Sun Products has been the No. 2 player in the US laundry category for years. In fact, Sun has maintained the position since it was formed in September, 2008 from the combination of Unilever’s North American fabric care business and Huish Detergents, Inc., a manufacturer of retailer brand laundry and dish products.

But in a recent conference call with analysts and investors, Church & Dwight’s CEO James Craigie said his company had jumped over Sun.

“The strong share gains achieved by A&H liquid laundry detergent and A&H powder laundry detergent and Xtra, our extreme value liquid laundry detergent, enabled Church & Dwight to pass The Sun Products Company to become the No. 2 laundry detergent company in America,” said Craigie. “This is a remarkable achievement for my company, which has been driven by a combination of new products, increased distribution, higher marketing spending and increased merchandising support behind our value oriented brands.”

But the folks at Sun insist Church & Dwight’s lead was a fleeting one.

“It could be a weekly thing,” countered Ed Vlacich, executive VP-national brands, Sun Products. “Year-to-date (early December, 2012) we are far ahead of Church & Dwight with an 18 share and they are at a 13 share. We have a strong No. 2 position.”

All Mighty Pacs have provided a lift for Sun Products.

Its No. 2 spot was made even stronger by the roll out of several products in 2012. Leading the way was All Mighty Pacs, which debuted in Q1 2012 and already has a 12 share, which is three times larger than the No. 3 player in the category, said Vlacich.

Sun Products is also updating some of the best-known brands in the business. For decades, Wisk has been known for its iconic “Ring Around the Collar” campaigns. Collars, however, aren’t the only place where dirt and oil can be found. According to Sun’s data, the average washload contains 20 times more body oils and sweat than visible stains, which is why the company launched Wisk Deep Clean, with an updated message that highlights the brand’s ability to remove body oil and sweat.

In addition to All Mighty Pacs and Wisk, Sun Products is investing in its All Free Clear brand, which Vlacich said is the No. 1 brand recommended by dermatologists.

“Forty-five percent of households have someone with sensitive skin,” he told Happi. “In 2012, we enhanced the brand’s communication to alert consumers that All Free Clear also removes seasonal allergens. We’ve been happy with the performance and expect more growth in 2013.”

Not to be outdone, in September, Church & Dwight rolled out Arm & Hammer Plus OxiClean Crystal Burst Power Paks and Arm & Hammer Toss n’ Done Power Paks.

But while unit dose shows promise, A&H executives don’t expect the form to ever capture 30% of the market. Rather, they predict a high-teen to low 20s share.

“We’re trying to find a way to continue winning in unit dose and winning in the liquid category, which still accounts for more than 80% of the market,” explained Kuchinski. “We think it comes down to a combination of brands, innovation and value.”

New Ideas in Softness

Fabric softeners also have an important role to play in most companies’ growth strategies. Keith said P&G must do a better job of conveying the value of its brands to consumers; e.g., just one sheet of Bounce Outdoor Fresh imparts more freshness than two sheets of the leading value brand, according to Keith. Meanwhile, at the opposite end of the price spectrum, Keith insisted that consumers understand the value and benefits of Downy Unstopables, despite the brand’s premium price point. At press time, Downy Unstopables were only available in three markets, but company executives maintain that the opportunities for expansion are enormous.

It may be winter in the US, but Sun Product executives are already thinking about Spring, as their All and Snuggle fabric softener brands are the official laundry product sponsors of Little League Baseball and Softball, beginning in 2013.

“It’s a big play for us,” said Vlacich. “We are covering the bases with a national program featuring in-store promotion, couponing and tie-in with the Little League World Series.”

Meanwhile, Method is urging consumers to “ditch the dryer sheet” with a new fabric softener spray that uses the dryer to deliver fragrance, softness and static control. New Method Dryer-Activated Fabric Softener Spray is billed as a powerful, plant-based liquid formula that’s sprayed directly into the dryer onto wet clothes and is evenly distributed during the drying process. It uses the clothes as a vehicle to disperse the product while the dryer spins. One bottle of this new fabric softener spray will work for 100 medium-sized loads of laundry. Similar to Method’s laundry detergent, four sprays are recommended for a standard-sized load.

According to Method, which was recently acquired by Ecover, dryer sheets are often made of polyethylene or polyester, meaning that they can’t be composted or recycled after use. Method’s fabric spray bottle is made from 100% PCR PET plastic and can be recycled. The spray debuted in September.

Who Buys What?

Unit dose systems became a reality after marketers realized that consumers were overwhelmed by the products and processes confronting them every time the did the laundry. But demographics, such as age and size of household, can have a real impact on what people look for in a laundry detergent. Breadth and depth of offerings can come in handy in this new retail environment.

“P&G fabric care has a portfolio that is designed to reach a multitude of different consumer groups,” explained Sarah Pasquinucci, communications, North American fabric and home care, P&G. “Between Era, Dreft, Cheer, Gain and Tide, we delight a variety of consumers with our detergents.”

She noted that consumers have many different needs, and it is P&G’s goal to meet those needs.

“If you look at MyTide (a marketing program that debuted in July 2011), for example, you see that there are many variants of Tide to reach the different needs of consumers—those seeking scent, whiteness, etc. Tide Pods is a great solution for those who want a pre-dosed detergent and a convenient laundry solution.”

The economy may be on the mend, but that doesn’t mean consumers will be flush with cash and ready to spend it on laundry detergent, according to Vlacich.

“The value trend will continue. People won’t want less value,” he told Happi. “They will not accept price increases, they want more for their money. (As a result) the value segment won’t be curtailed, it will continue.”

Vlacich noted that the 2011 launch of Sun Triple Clean with Oxi meets the needs of cash-strapped consumers who are still interested in using the latest laundry technology.

Craigie insisted that the recent addition of a sensitive skin variant to Church & Dwight’s Arm & Hammer liquid laundry detergent is designed to appeal to the more than 50% of consumer households who have sensitive skin issues.

“It will drive growth of the Arm & Hammer liquid laundry brand, which has posted 14 consecutive quarters of growth,” he maintained.

What’s Ahead

This year, Sun will grow behind single dose initiatives, some new variants within existing brands and product improvements. Vlacich noted that new improved All just began shipping and it’s filled with improved aesthetics.

“Our consumer research told that consumers want stain removal and whitening, but they also want things such as optimized scent, good product color and proper viscosity.”

Looking ahead, Vlacich maintained that convenience and price will continue to drive the US laundry category. In Sun’s research, convenience is the No. 1 benefit consumers cite these days, with value coming in at No. 2, which may explain why value products are growing faster than premium brands these days.

“With products such as All Mighty Pacs, they are delighted that they don’t have to give up performance for convenience,” he explained. “But we have to deliver the right value. It’s not always about price. It’s a combination of performance and price.”

Industry sources agree that unit dose products have grabbed anywhere from 6-8% of the US laundry detergent market. But Vlacich maintains that there is plenty of room for growth. He pointed out that unit dose products have been in the UK for a decade and hold a 16% dollar share, a level that is attainable in the US, too. Much depends, however, on consumer perception. Unit dose products will grow as long as consumers agree that the product benefits outweigh the 25-40% premium they pay to use unit dose detergents.

Arm & Hammer Crystal Burst and Toss N Done give Church & Dwight a position in the unit dose segment.

The newest innovation from Church & Dwight debuts this quarter. Arm & Hammer Ultra Power 4x is easy to use, easy to handle and delivers on all four key consumer needs: efficacy, freshness, convenience and value, according to Kuchinski.

“We believe that P&G will win at the top of the market,” he told Happi. “We can win by delivering better value in cost and performance. Brands in the middle will get squeezed.”

From Procter’s viewpoint, the delegation of household chores is having an impact on product purchases.

“One thing that we continue to learn is that the US household is changing—who does laundry and how that laundry is done. We are seeing a trend of delegation—more women are working mothers, more generations are living in the house, boomerang kids are coming back home,” said Pasquinucci, “This change means that there isn’t just one laundry-doer anymore, and we need to design products to be easily used by those who aren’t doing the laundry every day.”

An example of easy-to-use products includes, of course, Tide Pods, as well as Bounce Dryer Bar.

Global expansion is on P&G radar as well. Keith noted that pods are only available in the US and Canada, and the technology has been limited to the Tide brand, implying that the concept could be expanded to P&G’s other laundry brands. Similarly, Downy Unstopables is only available in three markets.

Keith maintained that P&G is the only competitor in the US laundry market with a full portfolio of detergents, enhancers and additives and insisted that P&G can drive regimen use.

“We have the right strategy to trade in, trade up and trade across consumers,” she maintained.

If Keith’s right, a rising Tide may just lift all boats in the US laundry detergent business.

Amway, Ecolab and Clorox Chiefs Headline ACI Annual Meeting

Talk about headliners! Steve Van Andel, chairman of Amway, Doug Baker, CEO of Ecolab, and Don Knauss, CEO of Clorox, will all participate in an executive leadership panel discussion during the American Cleaning Institute’s annual meeting and convention, which will take place Jan. 28-Feb. 2, at the Grande Lakes Orlando, FL.

Besides getting a chance to listen to key industry leaders, the annual meeting gives attendees the opportunity to learn more about regulatory issues in the US and around the world from ACI and international association executives. There’s also a public policy session with former US Senator Chuck Hagel (R-NE) and former UN Ambassador Bill Richardson, who also served as governor of New Mexico, as well as a special session on The Foreign Corrupt Practices Event by Jacqueline C. Wolff, a partner with Manatt, Phelps & Philipp LLP.

The ACI Annual Meeting and Convention will give attendees ample opportunities to network with industry leaders during the ACI president’s reception, Eco-Tour, Cleaning for a Reason charity golf tournament and closing reception.

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